The Medicare Contractor's Payments in Jurisdiction 3 for Full Vials of Herceptin Were Often Incorrect

Our audit found that most Medicare payments that Noridian Administrative Services, LLC (Noridian), made to providers for one or two full vials of Herceptin were incorrect. Herceptin (trastuzumab) is a Medicare-covered biological drug used to treat breast cancer that has spread to other parts of the body.

Of the 634 selected line items, 399 (63 percent) were incorrect and included overpayments totaling $405,000, which the providers had not refunded by the beginning of our audit. One line item was adjusted before our fieldwork. The remaining 234 line items were correct.

The 399 incorrect line items included incorrect units of service and a lack of supporting documentation. The providers attributed the incorrect payments to clerical errors and to billing systems that could not prevent or detect the incorrect billing of units of service. Noridian made these incorrect payments because neither the Fiscal Intermediary Standard System nor the Centers for Medicare & Medicaid Services' Common Working File had sufficient edits in place during our audit period to prevent or detect the overpayments.

We recommended that Noridian (1) recover the $405,000 in identified overpayments, (2) implement or update system edits that identify for review multiuse-vial drugs that are billed with units of service equivalent to the dosage of an entire vial(s), and (3) use the results of this audit in its provider education activities. Noridian concurred with our recommendations.